STRATEGIC PLANNING PROCESS

• Strategic planning


  The process of finding the best means of attaining organizational goals
• Formal strategic planning

  A deliberative, disciplined approach to producing fundamental decisions and actions that shape and guide what an organization (or other entity) is, what it does, and why
• Formal strategic planning


  • Looks at the chain of cause and effect consequences over time of an actual or intended decision
  • Looks at the alternative courses of action that are open in the future, and when choices are made among the alternatives they become the basis for making current decisions
  • The essence is the systematic identification of opportunities and threats that lie in the future
  • Planning means designing a desired future and identifying ways to bring it about
• Formal strategic planning (as a process)


  Deciding in advance what kind of planning effort is to be undertaken, when it is to be done, how it is to be done, who is going to do it, and what will be done with the results
• Formal strategic planning (as a philosophy)


  • An attitude, a way of life
  • More of a thought process, an intellectual exercise, than a prescribed set of processes, procedures, structures, or techniques
• Formal strategic planning (as a structure)


  A formal system that links three major types of plans: strategic plans, medium-range programs, and short-range budgets and operating plans
• What strategic planning is not

  • It does not attempt to make future decisions
  • It is not forecasting product sales and then determining what should be done to assure the fulfillment of the forecasts
  • It is not an attempt to blueprint the future
  • It is not necessarily the preparation of massive, detailed, and interrelated sets of plans
  • It is not an effort to replace managerial intuition and judgment
  • It is not a simple aggregation of functional plans or an extrapolation of current budgets
  • It is not about day-to-day tactical moves and knee-jerk reactions to external stimuli
  • It is neither an annual budgeting exercise nor a justification of what the organization is doing
  • It is not pipe-dreaming about unreachable stars and euphoric utopias
• Right to left planning


  Beginning with the end in mind
• Key Result Areas (KRAs)

  Qualitative manifestations that the objectives are being attained
• Performance Indicators (PIs)


  Exact quantifications of the KRAs
• Types of Performance Indicators


  • Reach
  • Recognition
  • Ratings
  • Revenues
  • Returns
  • Responsiveness
• Negative ratings indicators


  Number of customer complaints, sales returns and rejects
• Revenues


  Sales of the organization, grants or donations for civic/development organizations
• Returns


  Bottom-line profit measurement for business organizations (return on equity, return on sales, return on investments or assets), dividends or increases in market value of shares for stockholders, cost-benefit measures, productivity indices, fund surpluses, economic and social rates of return, or sustainability indices for non-business organizations
• Responsiveness


  Impact an organization has on its customers or intended beneficiaries (e.g. better health, comfort, cleanliness for business, higher quality of life for development organizations, graduates fitting job market needs for schools)
• Right to left planning exercise


  1. Generate major alternatives/strategic options

  2. Determine activities and tasks

  3. Determine required resources (people, money, physical facilities)
• The cooperative wanted its members to earn sufficient income to meet the minimum basic needs of food, shelter, clothing, education, health and recreation
• Performance indicator


  Level of income per average family of five that would allow members to have quality of life, defined as meeting the minimum basic needs
• The average monthly income of the cooperative members was Php8,000 per family, while the target performance indicator was Php16,000 per month
• Strategic planning process


  1. Initiating and agreeing on the process

  2. Identifying organizational mandates

  3. Clarifying mission and values

  4. Assessing external and internal environments

  5. Identifying strategic issues

  6. Formulating strategies and plans

  7. Reviewing and adopting strategies and plan

  8. Establishing an effective organizational vision

  9. Developing an effective implementation process

  10. Reassessing strategies and the strategic planning process
• Strategic issues are fundamental policy questions or critical challenges affecting the organization's mandates, mission, values, products/services, clients, costs, financing, organization, or management
• Strategies are developed to deal with the identified strategic issues
• Strategies are formulated in order to deliver product or service outputs which match the outcome expectations of customers
• The more exact the match between outputs and outcomes

  The greater the value experienced by delighted customers and the higher the performance levels of the strategizing organization
• Diagram 6.1


  • Figure (a) depicts a moderate match between organizational outputs and customer outcomes
  • Figure (b) illustrates a perfect match between outputs and outcomes
• Strategy Implementation Plan


  1. Determine right product/service outputs

  2. Design and deliver plan
• Right output


  • Right quality
  • Right cost
  • Right time
• The strategist must configure the total Enterprise or Organizational Delivery System
• Basic issues to settle by the strategist

  • What technology should be used
  • What organizational modality should be adopted
• Technology


  Determines both the hardware and the software needed to produce the products or render the services
• Hardware includes


  • Physical plant or premises
  • Machinery and equipment
  • Utilities
  • Logistical support
  • Materials
  • Supplies
• Software includes


  • Operating systems and procedures
  • Management processes and supervision
  • Worker motivation, skilling, deployment and control
  • Technology application and utilization
  • Operations work flow
  • Materials and work-in-process flow
  • Layout
  • Quality control
• Organizational modality


  • Clarifies what parts of the delivery system will be implemented by the enterprise itself
  • Specifies which entities will do what jobs and under what legal structures
• Inputs


  • Money
  • Manpower
  • Management
  • Methods
  • Materials
  • Machinery
• Three basic resources required

  • Pesos
  • People
  • Physical Assets
• Four budgets that comprise the Master Budget

  • Operating Budget
  • Cash Budget
  • Capital Expenditures Budget
  • Manpower Budget
• Seven P's of Marketing

  • Positioning
  • Product
  • Packaging
  • Place
  • People
  • Promotions
  • Pricing
• A perfect Product-Market fit


  Leads to the attainment of Outcomes or the desired end results of the enterprise
• Good customer outcomes


  Mean high market outcomes
• Superb customer and market outcomes

  Yield great financial outcomes